Welcome to the presentation

Asifulla Azadweb.www.asifullaazad.com

Completed Internship from…..

An Internship Report on …..

Background of The Study…..

Internship is an academic requirement. For internship every student is required to work in a selected institution to enhance ones practical knowledge and experiences.

Sources of data…..Basically two sources for collecting data & necessary information. Those are,

Primary source A primary source (also called original source or evidence) is an artifact, a document, a recording, or

other source of information that was created at the time

under study.

Secondary source A secondary source is a document or recording that relates or discusses information originally presented elsewhere. Secondary sources

involve generalization, analysis, synthesis, interpretation, or evaluation of the

original information.

Data Collection process…..I’ve collected both primary & secondary data by different processes.Primary

Data:

Primary data are collected by different group discussions, personal observation of the organizational culture, their internal process of managing

liquidity & from different statistical measures & analysis that I’ve shown later on in this

report.

Secondary Data:

From working in this organization, I’ve got the facility to go through

maximum of the record file related to the liquidity issue. So many important data were been

collected from there. Some other data I’ve collected from the

website.

Limitations of the Report…..

•The main constrain of the study was insufficiency of information, which was required for the study. There are various information the bank employee can’t provide due to security and other corporate obligations.

•Due to time limitation many of the aspects could not be discussed in the present report. Learning all the functions within just 90 days is really tough.

•Since the bank personnel were very busy, they could not provide enough time to me. Lack of opportunity to visit more than one branch.

Beginning of Banking in Bangladesh…..After independence the Government of People’s Republic of Bangladesh was formally to cover the charge of the administration of the territory now constitute Bangladesh.

In an attempt to rehabilitate the war - devastated banking Bangladesh, the government promulgated a law called Bangladesh Bank (temporary) Order, 1971 ( Acting President’s order No.2 of 1971).

By this Order, the state bank of Pakistan was declared to be deemed as Bangladesh Bank and offices, branches and assets of said State Bank was declared to be deemed as offices, branches and assets of Bangladesh Bank

existed the following 12 banks in Bangladesh…..

National Bank of Pakistan

Bank Bahawalpur Ltd.

Habib Bank Ltd.

Premier Bank Ltd.

Commerce Bank Ltd.

United Bank Ltd.

Union Bank Ltd.

Muslim Commercial Bank Ltd.

Standard Bank Ltd.

Australasia Bank Ltd.

Eastern Mercantile Bank

Ltd.

Eastern Banking Corporation Ltd.

Nationalization of Banks in Bangladesh…..the Government of Bangladesh decides to nationalize all the banks of the country accordingly on the 26th March, 1972

Existing Bank New Bank

National Bank of Pakistan.Bank Bahwalpur LtdPremier Bank Ltd

Sonali bank Ltd.

Habib Bank LtdCommerce Bank Ltd

Agroni bank ltd.

United Bank LtdUnion Bank Ltd

Janata bank ltd

Muslim Commercial Bank LtdStandard Bank Ltd.Australasia Bank Ltd

Pubali bank ltd .

Eastern Mercantile Bank Ltd. Rupali bank

Eastern Banking Corporation Ltd Uttara Bank Ltd

Scheduled BanksThe banks which get licenses to operate under the Bank Company Act, 1991 (Amended in 2003) are termed as Scheduled Banks.

Agroni Bank Ltd

Janata Bank Ltd

Rupali Bank Ltd

Sonali Bank Ltd

Privatization of Banks in Bangladeshwhich are established for special and definite objective and operate under the acts that are enacted for meeting up those objectives, are termed as Non-Scheduled Banks.

AB Bank Limited

Bangladesh Commerce Bank Limited

Bank Asia Limited

BRAC Bank Limited

Dhaka Bank Limited

Dutch Bangla Bank Limited

Eastern Bank Limited

Farmers Bank

IFIC Bank Limited

Jamuna Bank Limited

Meghna Bank

Mercantile Bank Limited

Modhumoti Bank

Mutual Trust Bank Limited

National Bank Limited

NCC Bank Ltd

NRB Bank

One Bank Limited

Prime Bank Limited

Pubali Bank Limited

\Southeast Bank Limited

Standard Bank Limited

The City Bank Limited

The Premier Bank Limited

Trust Bank Limited

United Commercial Bank

Uttara Bank Limited

Foreign commercial banks9 foreign commercial banks are operating in Bangladesh. These are:

Bank Alfalah Citibank

Commercial Bank

Ceylon Habib Bank Limited

HSBC National Bank of

Pakistan

Standard Chartered

Bank

State Bank of India

Woori Bank

Specialized development banksSpecialized banks are now operating which were established for specific objectives like agricultural or industrial development. These banks are also fully or majorly owned by the Government of Bangladesh.

Banglades

h Developme

nt Bank

Bangladesh

Krishi

Bank

BASIC Bank

Limited (Banglad

esh Small

Industries and

Commerce Bank Limited)

Probation

Kolla

n Bank

Krishi

Unnayan Bank

About Janata Bank

Janata Bank Limited is one of the biggest commercial banks of the country. It’s a state owned bank that was formed just after liberation of Bangladesh.

In fact it was a combination of two smaller banks namely United Bank Limited and Union Bank Limited.

Janata Bank Limited welcomes you to explore the world of progressive Banking in Bangladesh.

Janata Bank at a glance

Feature Value Name Janata bank ltdRegistered Address Janata bhaban ,motijheel commercial area,

1000Legal Status Public Limited CompanyChairman Shaikh Md. Wahid-uz-ZamanManaging Director & CEO Md. Abdus SalamCompany Secretary Md. Mosaddake-Ul-AlamDate of incorporation 21 May 2007Authorized Capital BDT 20,000 MillionPaid up Capital BDT 19,140 MillionFace value per share BDT 100 per share

Shareholding Pattern100% Share owned by the Government of Bangladesh

Number of Employees 15485 (As on 31.12.2013)Banking licence obtained from Bangladesh bank

31 May 2007

Phone no. 9560000, 9566020, 9556245-49, 9565041-45, 9560027-30

Fax 88-02-9554460, 9553329, 9552078SWIFT JANB BD DHWebsite http://jb.com.bdE-mail md@janatabank-bd.com

Credit Management Policy Commercial Bank performs various responsibilities now a day. Providing Loans and Advances is one of the main duties among them.

Basically credit is the institutional arrangement of lending funds mainly to the traders and industrial entrepreneurs by the banking company.

The major portion of bank’s funds is employed by various ways of loans and advances, which is the most profitable employment of its funds.

Objective of the credit policyThere are some objectives behind a written credit risk management of Janata Bank that are as follows

To provide a guideline for giving loan.

Prompt response to the customer need.

Shorten the procedure of giving loan.

Reduce the volume of work from top level management.

Delegation of authority of work from top level of management.

To check and balance the operational activity

Sources of CreditThe sources of providing loan of a bank are given below:

Paid up Capital

Retain earning

Loans from Bangladesh Bank and other Bank

Different types of deposit

Steps of credit disbursement

Credit risk is the risk of loss arising from the failure of a borrower, issuer, counterpart or customer to meet its financial obligations to the Bank.

The Bank's credit risk policies define different level risk parameters under which credit risk is monitored and controlled. Credit exposures are controlled by a system of limits/caps based on internal risk grading.

This system applies to all credit exposures, foreign exchange settlement exposures and exposures arising from settling securities trades for customers.

Credit Risk GradingThe Credit Risk Grading (CRG) is a collective definition based on the pre-specified scale and reflects the underlying credit-risk for a given exposure. A Credit Risk Grading deploys a number/ alphabet/ symbol as a primary summary indicator of risks associated with a credit exposure. Credit Risk Grading is the basic module for developing a Credit Risk Management system.

The following is the proposed Credit Risk Grade matrix based on the total score obtained by an obligor.

Number Risk Grading Short Name Score

1 Superior SUP 100% cash coveredGovernment guaranteeInternational Bankguarantees

2 Good GD 85+

3 Acceptance ACCPT 75-74

4 Marginal/Watch list MG/WL 65-74

5 Special Mentioned SM 55-64

6 Sub-Standard SS 45-54

7 Doubtful DF 35-44

8 Bad & Loss BL <35

ROE measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities).Among the most important ratio measures of bank profitability used today are following:Return on Equity (ROE) = Net income after taxes/ Total equity capital.

Interpretations:The ROE of Janata Bank Limited in 2015 is very satisfactory ROEs of Janata Bank in 2015 is far better than that of 2014.

Year 2011 2012 2013 2014 2015 South East

Bank(2015)

ROE 16.32% 49.74% 16.32% (35.74%) 49.09% 22.2%

ROA is primarily an indicator of managerial efficiency; it indicates how capably the management of the bank has been converting the institution of assets into net earnings. The ratio of a bank’s net after tax income divided by its total equity capitalReturn on Asset (ROA) = Net income after tax / Total Asset

Interpretations:•Return on assets gives an indication of the capital intensity of the company, which will depend on the industry; companies that require large initial investments will generally have lower return on assets. •The ROA of Janata Bank in 2015 is also far better than 2014. •ROA of SEBL is slightly better than JBL

Year 2009 2010 2011 2012 2013 SEB(2013)

ROA 1.00% .77% 1.12% (3.50%) 1.42% 1.64%

Net interest margin is a performance metric that examines how successful a firm's investment decisions are compared to its debt situations. A negative value denotes that the firm did not make an optimal decision, because interest expenses were greater than the amount of returns generated by investments.Net Interest Margin= (interest income from loans security investment) – (interest expanses on deposit and others debt issues ) / Total Asset

Interpretations:•Net interest margin in 2013 is very close to zero •From the financial report of Janata Bank it can be said that the net interest margin in year 2012 was far better than year 2013. •SEBL NIM is better than JBL

Year 2009 2010 2011 2012 2013 SEBL(2013)

Net 1.8% 2.61% 2.53% 1.78% .47% .89%

interest

Margin

Net Non Interest Margin

The noninterest margin, in contrast, measure the amount of noninterest revenues stemming from deposit service charges and other service charges other services fees the bank has been able to collect relative to the amount of noninterest cost incurred.Net non-interest margin= Noninterest Revenue-noninterest expense/Total Asset

Interpretations:In 2013 net noninterest margin is negative In 2012 it was little bit better than 2013 because of positive figure The non interest margin of SEBL is very much satisfactory than JBL

Year 2009 2010 2011 2012 2013 SEBL(2013)

Net (.51%) (.0058%) .25% .0034% (.61%) Unavailable

noninterest Data

margin

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability.Earnings per Share= Net Income after Taxes/ Common equity shares outstanding

Interpretations:

Earnings per share are positive for the shareholders. The earnings per share of Janata Bank Ltd. in year 2015 are 84.21 where in year 2014 it was negative. It indicates the better performance of this bank in 2015

Year 2011 2012 2013 2012 2015 SEBL(2015)

EPS43.46%43.11 88.16% 79.3% 58.91 84.21% 3.86%

Net Profit Margin Net profit margin is the percentage of revenue remaining after all operating expenses, interest, taxes and preferred stock dividends (but not common stock dividends) have been deducted from a company's total revenue.Net profit margin= Net income after taxes/ Total operating revenue

Interpretations:•Net profit margin is better than all previous year •Net profit margin is 17.37% in 2013 where in 2012 it was negative. •NPM of janata bank is 17.37 where’re the SEBL is more about 5% less

Year 2009 2010 2011 2012 2013 SEBL(2013)

Net profit 11.64% 16.03% 10.93% (30.86%) 17.37% 12.55%

margin

Janata Bank Limited and its Subsidiaries Consolidated Statement of Changes in Equity for the year ended 31 December 2015

Segment reportingFor the purpose of segment reporting as per Bangladesh Financial Reporting Standards (BFRS) 'Operating Segments‘

the following segment relating to revenue, expenses, assets and liabilities have been identified and shown as follows:

1.Loans & Advances2.Treasury3.Overseas Branches (UAE)4.JCIL, Dhaka5.JEC, Italy6.JEC, USA

Operating segments

Janata Bank Limited Subsidiaries of JBL

Loans &Oversea

s JCIL, JEC, JEC, TotalParticulars Treasury

Branches, Other Totaladvance

s Dhaka Italy USAUAE

Interest income30,045.7

9 - 396.40 - 30,442.19 54.80 1.34 - 30,498.33

Interest expenses(33,612.3

7) (146.75) (12.71) -(33,771.8

3)(230.89

) (2.47) -(34,005.1

9)

Net interest income(3,566.58

) (146.75) 383.69 - (3,329.64)(176.09

) (1.13) - (3,506.86)

Investment income -18,261.7

3 - - 18,261.73 109.32 - - 18,371.05

Commission & brokerage - 745.67 25.26 - 770.93 19.62 19.98 0.07 810.60

Foreign exchange income - 4,191.81 20.50 - 4,212.31 - - 0.17 4,212.48

Other operating income - - 263.27 1,515.60 1,778.87 0.05 - - 1,778.92

Total operating income(3,566.58

)23,052.4

6 692.72 1,515.60 21,694.20 (47.10) 18.85 0.24 21,666.19

Total operating expenses - - (367.22)(10,606.4

8)(10,973.7

0) (38.33) (46.53) (3.94)(11,062.5

0)

Profit before provision(3,566.58

)23,052.4

6 325.50(9,090.88

) 10,720.50 (85.43) (27.68) (3.70)10,603.69

Rate of operating income (33.27%) 215.03% 3.04% (84.80%) 101.10% (0.81%)(0.26%

) (0.03%) 100.00%

Loans & advances346,029.

03 - 3,832.27 -349,861.3

0 718.47 - -350,579.7

7

Investment -224,273.

17 - -224,273.1

72,204.5

6 26.26 -226,503.9

9

JBL’s significant achievementsJBL is one of the leading state owned commercial bank in the country in terms of asset quality, profitably, product diversification, capital adequacy, service portfolio etc.

achievements of JBL in key areas during 2013 were:

• net profit after tax and provision appeared as BDT 9,551.39 million.

• the capital sufficiency of the bank is higher than the rate of 10% that prescribed by Bangladesh Bank.

• earnings per share (EPS) are BDT 86.31 which was negative in 2012.

• the rate of classified loan reduced to 11.12% which was 17.42% in 2012.

• the bank deposited approximately BDT 8,327 million as tax with vat, excise duty, source-tax etc.

Findings of the ReportEvery bank has its own credit procedure. The Janata Bank Ltd possesses a standard credit procedure.

As the objective of my report is to make a comment on the credit risk management of Janata Bank Ltd, I tried my best to collect data for the report and find out the reality. Based on the data generated during my internship period I have summed up my findings here and I think this will help me to achieve my objectives.

To improve the risk management culture further, Janata Bank Limited should adopt some of the industry’s best practices that are not practiced currently. These are:

•Continuous monitoring of the customer should be conducted so that loan cannot be classified.

•The bank should emphasis more on loan diversification like loans on different promising sectors and newly invented thrust sectors in the economy.

•Political intervention should be avoided while approving and sanctioning loan.

•All the loan documentations have to done honestly. The bank should concentrate more on proper documentation of all types of loans to make the department trustworthy & healthy.

It goes without saying that credit policy cannot be isolated from the broader monitory policy of the country.

Like any other segment of the economic policy, credit is very important for any financial institution as it generates profit and gear up economic activities of the country.

In other words, credit is business and it is input in the production process of the country.

THANK YOU